Nags Head Horse Hotel Limited v Forest Trustee Limited

[2012] NZHC 2767

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001739 [2012] NZHC 2767

BETWEEN  NAGS HEAD HORSE HOTEL LIMITED Plaintiff

ANDFOREST TRUSTEE LIMITED First Defendant

ANDOTIUM TRUSTEE LIMITED Second Defendant

ANDZEBRA CROSSINGS TRADING LIMITED AND PETER WILLIAM MAWHINNEY

Third Defendants

Hearing:         17 October 2012

Appearances: L A O'Gorman for Plaintiff

P W Mawhinney in person
No appearance for Intended Third Parties

Judgment:      19 October 2012

JUDGMENT OF COURTNEY J

[Re Application for leave to join Third Party]

This judgment was delivered by Justice Courtney on 19 October 2012 at 5:00 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………

Solicitors:           Buddle Findlay, P O Box 1433, Auckland 1140

Fax: [phone] – Email: [email protected]

Copy to:             P W Mawhinney, P O Box 95157, Swanson, Auckland

Email: [email protected]

NAGS HEAD HORSE HOTEL LTD V FOREST TRUSTEE LTD HC AK CIV-2012-404-001739 [19 October

2012]

[1]      The plaintiff, Nags Head Horse Hotel Limited (Nags Head) asserts that the mortgage it holds over a property in West Auckland had priority over the mortgage held by third defendants Zebra Crossings Trading Limited and Peter Mawhinney over the same property.   It is suing to enforce a Deed of Priority relating to these mortgages and has applied for summary judgment.  Its application is to be heard on

30 November 2012.  Mr Mawhinney has applied for leave to join two third parties, the Registrar General of Land and the Attorney-General. Nags Head.  The plaintiff and the intended third parties oppose the application[1], which I heard at the same time as Nags Head’s application for interim injunction.[2]

[1] Although the intended third parties did not appear they did file a notice of opposition and memorandum of counsel, which I took into account.

[2] Nags Head Horse Hotel Ltd v Forest Trustee Ltd & Ors HC Auckland CIV-2012-404-001739, 18

October 2012.

[2]      Joinder  of  third  parties  on  a  summary  judgment  application  may  be permitted, with the most common considerations being delay or prejudice to the plaintiff and the possibility of different results on the same issue as a result of separate proceedings being issued.[3]

[3] Druids Friendly Society v Westpac Merchant Finance Ltd (1996) PRNZ 644.

[3]      The question of delay is significant in this case.  The application was filed in March 2012 and it is desirable that it be dealt with in a timely manner.  But, given that time would be needed to allow newly joined third parties to respond, it is inevitable that the application for summary judgment will not be heard until some- time next year if the application for joinder is granted.

[4]      I note that Mr Mawhinney has only been a party to the proceeding since September 2012.   However, that joinder was not at Nags Head’s instigation; he himself applied to be joined following the transfer of the mortgage from OTL to Zebra/Peter Mawhinney.  That transfer appears to have been made, at least in part, specifically to  provide  Mr  Mawhinney (who  is  an  undischarged  bankrupt)  with standing to make the application to be joined.   Further, the grounds advanced by Mr Mawhinney as justifying the joinder of the proposed third parties existed from

the time summary judgment application was made and could have been raised by

any of the other defendants.  This is significant because Mr Mawhinney is closely associated with the other defendants; he is co-trustee with the first defendant, Forest Trustee Ltd (FTL).  He is a shareholder of the second defendant, Otium Trustee Ltd (OTL)[4] and also a co-trustee of OTL in relation to the Zebra/Mawhinney mortgage, which OTL previously owned.  He a trustee of the third defendant, Waitakere Forest Land Trust.   As a result, the fact that Mr Mawhinney himself has only recently

become a party is not as significant as it might first appear.

[4] In his affidavit sworn 7 September 2012 Mr Mawhinney deposed that he held this share on trust for

Sixty-six Auckland Trust.

[5]      In support of his application Mr Mawhinney asserts that he has a claim against the proposed third parties, that the relief and remedy claimed against them relates to or is connected with the subject matter of the original proceeding and the issues to be determined are substantially the same.

[6]      The property that Nags Head claims as security under its mortgage has been sold three times since the Deed of Priority was executed.   The current registered owner is the first defendant, Forest Trustee Ltd (FTL).   However, the defendants claim that the property has been sold by Zebra/Mawhinney pursuant to their power of sale under the Zebra/Mawhinney mortgage.  They say that the purchaser, End of the Line Ltd (EOTL) is unconnected with Mr Mawhinney and had no notice of the Deed of Priority.

[7]      The summary judgment application will turn largely on the circumstances of the sale to EOTL.  Mr Mawhinney’s defence to the summary judgment application is that the Nags Head mortgage no longer exists because the effect of s 105 of the Land Transfer Act 1952 is that EOTL is entitled to registration of its title free of the Nags Head mortgage.

[8]      Land Information New Zealand (LINZ) has refused to discharge the Nags Head mortgage and a caveat lodged by it to allow registration of the transfer to EOTL.   The joinder application is based on Mr Mawhinney’s claim that he has a right of action against LINZ under s 172 of the Land Transfer Act 1952 for that

refusal.   He has filed a draft statement of claim seeking orders requiring LINZ to

discharge the Nags Head mortgage and caveat and register the transfer to EOTL.  He would also seek damages of $7m to represent the loss or damage caused by the Nags Head mortgage and caveat and EOTL’s inability to register the transfer of title.

[9]      The question of whether, in the circumstances of the sale to EOTL, s 105 operates to extinguish the Nags Head mortgage is unconnected with the proposed third parties.  It is a mixed question of law and fact that concerns only the current parties to the litigation.  If it is determined in Nags Head’s favour there will be no basis for Mr Mawhinney to claim against the proposed third parties because LINZ will have acted correctly in refusing to discharge the mortgage.

[10]     If the question is resolved in Mr Mawhinney’s favour, the summary judgment application will fail and an application for joinder of the proposed third parties can be made at that point.  This course spares the proposed third parties the unnecessary cost in being involved in the summary judgment application.   Nor is there any prejudice to Mr Mawhinney in that course because the nature of the proposed third party claim makes it inappropriate for summary judgment; the proposed third parties already object to the form of the draft statement of claim on the basis that it does not adequately identify the proposed case against them and there are obvious difficulties in identifying whether and to what extent Mr Mawhinney himself will suffer loss as a result by LINZ’s actions.  So Mr Mawhinney would have to properly plead and provide particulars of any claim that he brought.

[11]     For these reasons the application for joinder is dismissed.  The plaintiff and the intended third parties are entitled to costs and disbursements on a 2B basis.

P Courtney J